In 2024, the Ministry of Justice introduced some legislative changes that defined new document retention periods for sole proprietorships. Find out more about the current deadlines, as well as other restrictions that every entrepreneur needs to consider when running and closing a sole proprietorship

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Every entrepreneur should understand that the fact that the procedure for terminating the sole proprietorship has been initiated is a reason to conduct a documentary audit of the taxpayer for at least the last 3 years. And it is the conduct of such an audit that will be the legal basis for deregistering the entrepreneur from the tax authorities. At the same time, the tax authorities have the right to conduct a documentary unscheduled audit. Therefore, if they deem it necessary, they can conduct it at any time. Hence, it is necessary to understand the retention periods for documents for sole proprietorships and other restrictions.

Read this article to learn how to properly close a sole proprietorship.

Legal framework: how long do you need to keep documents for a sole proprietorship?

Back on February 10, 2024, an order of the Ministry of Justice came into force, which amended the “List of standard documents created during the activities of state and local governments, other institutions, enterprises and organizations, indicating the periods of storage of documents”. This list determines the retention periods for the relevant documents.

The main and most significant change introduced by this Order is the requirement to keep financial and tax documents in accordance with the provisions of the Tax Code, whereas previously it was voluntary for individual entrepreneurs.

The retention period for documents and information related to the calculation and payment of taxes and fees for individual entrepreneurs, which is set in accordance with the TCU, is 3 years.

With regard to the possibility of destroying documents, documents relating to reporting periods for which a tax audit can no longer be conducted and for which the minimum retention period has expired (for sole proprietorships - 3 years) are subject to destruction.

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How to correctly calculate the period?

The same List stipulates that the retention periods for documents related to the calculation and payment of taxes and fees, contributions, and other mandatory payments are calculated

➤ from the date of submission of tax or other reporting, for the preparation of which the said documents and/or information are used;

➤ in case of non-submission, from the deadline for submission of such reports provided for by the TCU.

Other requirements to be taken into account by individual entrepreneurs

The retention period for certain documents related to financial and business activities has been increased from 1 (or 3) years to 5 years. And they have been subject to the following reservations:

1. Documents related to a tax audit, inspection (audit) by a state financial control body and/or an administrative or judicial appeal of a decision based on the results of such an audit shall be kept for at least the minimum period established and for one year after the expiration of the statutory period for judicial appeal of such a decision.

— In case of appeal - within one year from the date of entry into force of the court decision that concluded the case.

— In case of appealing such a court decision - within three months from the date of entry into force of the final court decision, which cannot be further appealed.

2. Documents that have expired the minimum storage period and relate to reporting periods for which tax audits (inspections) will no longer be conducted shall be destroyed (except for those that may be used to document compensation for material damage caused to the Russian Federation).

3. Documents and information subject to the requirements of Articles 39 and 39-2 of the TCU shall be kept for at least 7 years.

You can get advice on opening, running and liquidating a sole proprietorship in Ukraine on the Visit Ukraine portal. Our lawyers will answer all your questions and, if necessary, help you solve urgent problems. To order a legal consultation or full legal support, please follow this link.

We remind you! Today, sole proprietors can submit their tax returns online. We told you how to do this through Diia or the tax app earlier.

Want to know more? Read the latest news and useful materials about Ukraine and the world in the News section.

Ihor Usyk is the Head of Legal Department at Visit Ukraine

If you want to start your own business in Ukraine, you can get advice from my colleagues.
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